The penalty for privacy violations: How privacy violations impact trust online

With information misuse as a particularly salient form of risk online, respecting privacy is often closely tied to trust in consumer surveys. This study uses factorial vignette survey methodology to measure the relative importance of violating privacy expectations to consumers' trust in a website. The findings suggest consumers find violations of privacy expectations, specifically the secondary uses of information, to diminish trust in a website. Firms that violate privacy expectations are penalized twice: violations of privacy (1) impact trust directly and (2) diminish the importance of trust factors such as integrity and ability on trust. In addition, consumers with greater technology savvy place greater importance on privacy factors than respondents with less knowledge. Violations of privacy may place firms in a downward trust spiral by decreasing not only trust in the website but also the impact of possible mechanisms to rebuild trust such as a firm's integrity and ability.